THE WASHINGTON POST: Here’s how a debt collector plans to turn around failing for-profit colleges

Career College Central Summary:

  • Student debt collector ECMC Group on Monday completed its controversial purchase of more than half the campuses of Corinthian Colleges, the embattled for-profit education company that was once one of the biggest in the country.
  • The $24 million sale has been met with resistance from lawmakers and student advocates since it was first announced in November. Critics have questioned whether a company with no experience teaching is qualified to take over schools serving nearly 40,000 students.
  • Corinthian, which runs Everest Institute, Wyotech and Heald College, has become the poster child for the worst practices in the for-profit education sector, including high loan defaults and dubious programs. Clouded by allegations of deceptive marketing and lying to the government about its graduation rates, Corinthian lost its access to federal funds last year, forcing the company to sell or close its schools.
  • But ECMC has lofty ambitions of turning the for-profit campuses into premier nonprofit schools, creating the country’s largest nonprofit system of career education.
  • In its first year of operation, ECMC chief executive David Hawn projects the company will spend more than $200 million on a series of initiatives and programs to largely gain the trust of students, and ultimately regulators.
  • “This is a sustainable business. It’s going to take a while to make it sustainable, but…we’ve made it our mission to help students succeed and we have the financial wherewithal to help students in a meaningful way,” Hawn said.
  • Most of the money will be used to widen a promise to cut tuition by 20 percent at Everest campuses. Existing students who continue and complete their course of study will now also be eligible for a 20 percent reduction that will be prorated for the remaining time in the program.
  • In another step to improve affordability, ECMC is establishing a $87 million grant program that will offer up to $10,000 a year to poor students whose financial aid awards don’t cover all of their expenses. The grants are meant to replace a notorious loan program, called Genesis, that landed Corinthian in hot water with the Consumer Financial Protection Bureau last September.

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THE WASHINGTON POST

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